Remember, first, that these technological advances will be adopted because companies will be able to make and do things cheaper. Because of this, people will buy more of what they are selling, generating an increase in demand for those newly productive workers that will at least partly offset the initial job loss from automation.
A generation ago, for example, air travel was so expensive that only wealthy people could afford to fly. Improvements in airplane technology and computer reservation systems have changed that, and now millions more Americans fly for business or pleasure or simply to go home for the holidays. There are fewer employees per flight, but more planes, pilots and flight attendants than ever.
Not all the benefit from increased productivity is captured by consumers in the form of lower prices, however. Some is captured by the workers who remain, who can now command higher wages because of the extra skills they have acquired. The rest of the benefit goes to company shareholders in the form of increased profit. And let’s not forget all those new high-paying jobs associated with designing, manufacturing and marketing all that job-destroying technology. With their higher incomes, all of these people — the remaining workers, shareholders and technology producers — will buy more goods and services of all sorts, increasing the demand for the workers who produce them.
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